George Osborne insisted last night that the government's austerity budget had full international backing from the G20, after the group of developed and developing nations called for a halving of budget deficits within three years.

The chancellor said that the G20's call for those nations facing the most serious fiscal challenges to "accelerate" the pace at which they repair the damage caused to public finances by the recession represented a significant change of tack.

Although the final communique from the weekend talks in Toronto papered over the cracks that have been emerged over the best way to nurture a fragile global recovery, Osborne denied that there were now deep splits in the body set up to steer the global economy through the most serious downturn since the 1930s.

"There is a very explicit recognition that countries with serious fiscal challenges should accelerate the pace of consolidation", Osborne said.

"People have seen a change in tone from the G20. People have understood the impact of the sovereign debt crisis."

In its first meetings in 2008 and 2009, the G20 agreed to emergency action to boost global growth, cutting interest rates to record low levels, and pumping billions of dollars into their economies through tax cuts and spending increases.

And Barack Obama had warned ahead of this weekend's fourth meeting in Toronto that the G20 should remember the lessons of history, and be wary of withdrawing economic stimulus packages too soon.

But yesterday the president welcomed the commitment to halve budget deficits by 2013: "We can't all rush to the exits at the same time."

"Some countries, Greece being the most obvious example, have to act immediately" to lessen the risk of defaulting on debt obligations, Obama said. But, he added, other countries must decide how much flexibility they have to encourage growth and job creation without going too much deeper into debt. "The point is, in each country, what we have to recognise is that the recovery is still fragile."

Strong US concern about the potential impact of a synchronised tightening of policy was reflected in last night's summit text; the communique said: "we are committed to taking concerted actions to sustain the recovery, create jobs and to achieve stronger common more sustainable and balanced growth. These actions will be differentiated and tailored to national circumstances."

But with the markets anxiously awaiting the outcome of the G20 talks, Osborne said talk of a rift over differing emphases was misplaced. "There is a necessity for countries to prove to international investors and their domestic populations that they have credible, realistic plans to live within their means," he said.

After weeks of public and often acrimonious arguments about the way to manage what the G20 called a still fragile global recovery, the communique also said that countries should aim to halve their budget deficits within three years and stabilise their national debt within six years, as well as halve their budget deficits within three years. It added that those states which failed to deal with budget deficits where action was necessary risked "undermining confidence and hampering growth".

However, concern in Washington over the risk of double dip recession meant the various states are allowed to make progress at their own pace on deficit reduction, and there will be no sanctions for nations failing to match the G20 target.

The communique acknowledged that, after the downturn, the economic recovery varies in pace across the world and a delicate balance is needed between restoring budget discipline and sustaining growth.

"There is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery," it said. "There is also a risk that the failure to implement consolidation when necessary would undermine confidence and hamper growth."

India's prime minister, Manmohan Singh, echoed Obama's anxiety in a bilateral meeting with David Cameron over the weekend. Singh noted that global recovery was still tentative, required concerted efforts by countries to anchor it firmly, and suggested government spending could make up for weak private demand.

"The communiqué recognises that countries are in different places", Osborne said. "Some countries are more able to boost global demand. But the best thing that countries with fiscal challenges can do is to show that they can live within their means. Barack Obama has recognised that."

The chancellor said that as the finance minister "with the biggest budget deficit in the G20", he had been forced to announce the £40bn of spending cuts and tax increases in last week's emergency budget. Osborne added that as a result Britain would match up to both the fiscal benchmarks set by the G20, but it would seek to do so in a growth-friendly way.

"Even in the last seven to eight weeks there have been concrete steps taken around the world to co-ordinate activity and to show there is a path to sustainable growth", Osborne said, citing China's willingness to allow its currency to float more freely, Europe's stress-testing of its banks and the G20's decision on budget cuts.

"There is a serious effort to co-ordinate recovery just as there was an effort to co-ordinate action during the recession."

Obama was also keen to preserve the unity of the G20. "We are aiming in the same direction, which is long-term sustainable growth that puts people to work," he said.

Cameron echoed this by saying that the G20 was taking a co-ordinated approach to securing the global recovery, but emphasised that the actions of individual countries were driven by their particular circumstances. "For countries like Britain, that action has to be fiscal consolidation. It has to be about sorting out our debt and our deficit. I don't expect the budget to be popular in every quarter – but it's necessary," he said.

"For some countries, fiscal consolidation is not an alternative to growth but the basis for the confidence that will make that growth sustainable."